Whereas nursing homes and hospitals often did not have enough patients to justify employment of a full-time therapist and suffered high turnover, InSpeech could staff more cost-effectively than health care institutions, pay its employees higher salaries on average than they made independently, and still earn a high return on equity through economies of scale. The rehabilitation industry offered inherently low overhead-the therapists themselves represented the overhead and the assets-that would be further enhanced through consolidation. InSpeech also lobbied for legislation that required nursing homes to provide therapy to residents, which further boosted its potential market. Foster foresaw the expansion of the rehabilitation industry, as Americans (especially the 'baby boomer' generation) continued to age and advances in the treatment of serious injuries resulted in physical impairment rather than death. At the time, the highly fragmented industry was dominated by thousands of local practices that Foster disparagingly called 'mom and pop franchises' in an October 1991 Business Week article. venture capital firm in 1985.įoster then began to make good on his goal of consolidating and integrating rehabilitation services in America, using InSpeech as his base. He then used the profits from that sale to acquire InSpeech, Inc. In 1983, Foster sold his namesake venture to Avon Products Inc. In 1980, Foster, a medical services entrepreneur, founded Foster Medical Corp., a home health care services and equipment company, which he took public two years later. However, the company's phenomenal growth was largely attributable to the direction of John H.

NovaCare was founded in 1976 as InSpeech, Inc. Foster, chairperson and CEO, predicted that the firm would reach annual sales of $3 billion by 1998. Having grown dramatically through acquisition and internal growth, the company reported average annual sales and earnings increases from 1987 to 1992 of 70.2 percent and 74.6 percent, respectively. NovaCare is the largest non-government employer of rehabilitation therapists, and has a nine percent share of the orthotics and prosthetics field. The company's largest business group, Contract Services (constituting over two-thirds of revenues), coordinates speech, occupational, and physical therapists with over 1,900 health care institutions&mdash′imarily nursing homes-in 39 states. is America's leading provider of contract rehabilitation services as well as orthotic supports and prosthetics.

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